ORGANIZATION OF THE U. S. DEPARTMENT OF AGRICULTURE.

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UNITED STATES DEPARTMENT OF AGRICULTURE

BULLETIN No. 1109

Washington, D. C.

January 16, 1923

SALES METHODS AND POLICIES OF A GROWERS'

NATIONAL MARKETING AGENCY.

A Study of the Organization and Achievements of Twenty-six Years of Cooperative
Marketing by Part of the Cranberry Growers of the United States.

By ASHER HOBSON, Specialist in Market Research, and J. BURTON CHANEY, one time
Research Agent in Marketing, Bureau of Markets.

Columbia University in the City of New York and Bureau of Agricultural Economics, U. S. Department

of Agriculture cooperating.

The cranberry has fared better in times of stress than other farm
products. For this reason the marketing methods of the cranberry
growers have been analyzed in detail in the hope that this analysis
may furnish suggestions that will be helpful in the marketing of other
farm products. Although this discussion deals specifically with the
marketing of cranberries by cooperative methods, it is not written
for the cranberry grower alone. It is addressed to all growers
interested in successful marketing methods. It deals with the
economic and not the legal aspects of the subject.

The noteworthy achievements of the cranberry growers are the

outcome of evolutionary practices based upon 26 years of experience

in selling through growers' cooperative agencies. The results of

organized efforts in this industry are the more remarkable because of

1936°-23-Bull. 1109-1

the unusual difficulties which must be overcome in the successful marketing of cranberries.

The cranberry growers of the United States are widely separated. The three largest producing districts are in Massachusetts, New Jersey, and Wisconsin. Cooperative marketing involved the coordination of the growers in these three widely separated localities into one central selling association.

The consuming public looks upon the cranberry as a luxury rather than a prime necessity. It is generally considered a holiday fruit. Thanksgiving and Christmas bring the turkey with its cranberry sauce to the minds of the American people, but Thanksgiving and Christmas demands alone are not sufficient to support the industry. Figure 1 shows the seasonal demand for this fruit. Over three

FIG. 1.-A problem of vital importance to cranberry growers is that of lengthening the consumption period. Since a large portion of the cranberry crop is now packed and shipped during three months, the grower is forced to maintain extensive screening and packing equipment which is idle all but a small part of the year.

fourths of the crop is marketed during October, November and December. This heavy demand during so short a period makes it impossible for many growers to maintain the necessary packing and screening equipment. Therefore, one of the important tasks before the growers is that of lengthening the consumption period. Furthermore, the consumption of the fruit depends, to no small extent, upon the supply and price of sugar.

Add to these difficulties the element of perishability and the problem of establishing uniform grades, and it can readily be seen that the successful marketing of cranberries is no small undertaking. A few of the outstanding accomplishments of cooperation in this industry are:

1. A reputation for quality has been built up by establishing and maintaining uniform grades and packs.

2. Marketing risks have been distributed equally among all members of the association by means of pooling systems. High and lowpriced orders, losses and gains through market fluctuations, and the risks of transportation, are equally divided. Pools are, in effect, a form of market insurance.

3. An advertising fund sufficient to bring the berries forcefully to the attention of the consuming public has been created by means of a small assessment per barrel. Through advertising, consumption has been increased to an extent sufficient to care for increased pro

300

350

A COMPARISON OF CRANBERRY, POTATO, AND
APPLE PRICES FOR THE SEASON 1920-1921

1920

1921

FIG. 2.-Apples, a staple fruit, and potatoes, a staple vegetable, did not fare so well as cranberries during the selling season of 1920-21.

duction. Advertising has played an important part in the achievements of the cranberry growers.

4. "Glutted" and "famine" markets have been eliminated by coordinating distribution from the three districts, and as a result market prices have been stabilized. Cranberry prices did not rise during the war in proportion to other prices. On the other hand, cranberry prices did not fall during the selling season of 1920-21, when prices of practically all farm products, as well as other commodities, declined rapidly. (See figs. 2 and 3.) This stabilization of the market, together with the establishment of uniform methods of dealing with the wholesale and retail trade, has built up a good-will relationship with the trade to a degree which could not have been reached by the growers individually.

50

5. The goal of cooperative marketing of perishable food products is to obtain the highest average price which will move the entire supply year after year. To this end the adjustment of demand forces to the supply of any given year requires a close study of ever-changing conditions affecting the price of the product. By cooperation the cranberry growers are in a position to employ specialized business men capable of advising them regarding supply and demand forces and their probable effect upon price and market conditions. Thus

400

A COMPARISON OF CRANBERRY PRICES WITH THE
PRICES OF THREE COMMODITY LINES, SEASON 1920-21

400

350

300

CRANBERRIES

FARM PRODUCTS

CLOTHS AND CLOTHING
ALL COMMODITIES

1913=100

FIG. 3.-Prices of practically all commodity lines fell rapidly during the cranberry selling season of 1920-21. Cranberries were an exception to the rule. It should be noted that the price of cranberries at the opening of the season was at a level much lower in proportion to the 1913 price than were the prices of the other commodity lines shown. It is the policy of the growers' company to open the season with a low price for the purpose of encouraging consumption.

the growers put themselves in a position to gauge the factors which influence the sale of their product and are better prepared to take advantage of market conditions as they find them. Individually the growers were unable to do this.

6. The wide fluctuation in yields from year to year shows that the exchange has little or no control over the volume produced. Hence its energies are necessarily turned toward economies in marketing and stimulation of consumption. These are matters over which the growers acting as individuals can have but little control.